The original definition of “economics” was “a science or art of managing a house or household.” This social science began simply by analyzing the distribution of group labor to provide what was needed for human survival. Eventually work assignments became organized activities called jobs, trades, careers, positions, and professions. As the population of humans increased, more people became involved in specific activities and in becoming proficient in one skill or another. Sophistication in the workplace evolved as follows:
1.) Primitive level: Gathering what was available and/or hunting for what was not available.
2.) Family businesses: Homemaking duties such as building a homestead; birthing, raising, and educating offspring; preparing food; sewing or knitting clothes for the family; tilling the soil; practicing animal husbandry; and selling in the neighborhood any surplus produced by members of the family.
3.) A local organization, referred to as a company, was assembled or incorporated that had production facilities, marketing activities, and an experienced workforce to produce goods and services that were needed by the local community.
4.) These small organizations merged, expanded their markets, improved their products, and introduced mass production techniques. The more advanced companies refined quality and production control, and hired industrial engineering and research and development staffs to launch new products and services. These large conglomerates became known as multi-national corporations.
The success of Capitalism in any country depended on the number of “rugged individualists” in the local economy that were motivated to become capitalists. Such aggressive humans were enterprising, industrious, optimistic, quick to learn, self-serving, self-assured, risk taking, and prone to gamble with capital – theirs or that provided by others.
The diversification of these complicated labor and capital intensive businesses can be broken down into the following industrial categories depending on whether the activities are legal or quasi-legal:
1.) “Ponzi” Schemers (Put in a little, and take out a lot)
Legal: Insurance companies, stock brokers, investment bankers, commercial bankers, credit card issuers, and any business that loans money charging interest rates and collecting late fees that are not deemed usurious.
Quasi-legal: Loan sharks that charge usurious interest rates, something-for-next-to-nothing Internet solicitors, entrepreneurial scallywags seeking venture capital to finance some ingenious invention or exotic service, and any daring individual with a get-rich-quick scheme that is based on duping the innocent out of their savings.
2.) Protection Racketeers (Safety and security are always available for a price)
Legal: For our Civic Protection. The military branch of our federal government, the police forces of our local governments, our local fire departments, and the numerous security staffs employed to guard large buildings, airports, and entry ports at our borders. For our personal protection. Doctors, dentists, nurses, physical therapists, lawyers, and professional advisors like architects, financial advisors, and CPAs.
Quasi-legal: Members of various Mafias, street gangs, and informal ad hoc groups that supposedly want to protect the public from those nefarious individuals lurking mostly on the streets of large cities who are primed and ready to do harm to defenseless citizens and their real estate possessions and steal their personal possessions.
3.) Influence Peddlers (Everyone is influenced by some outsider. Why not get paid for doing that?)
Legal: Churches, temples, and mosques; advertising companies; pollsters; public relations agencies; lobbyists; unions; professors, teachers, and instructors with political agendas that educate the masses; TV, radio, and business spokespersons; journalists, writers, and reporters; and anyone desirous of manipulating the public’s sentiments without fear of retribution.
Quasi-legal: Drug peddlers, unlicensed arms dealers, retail establishments and local bars that sell narcotics under the table and alcohol to minors, persons who libel and slander others, and witnesses who lie in court to protect their friends.
4.) Miners, Farmers, and Other Producers (Some of the best things in life can be very expensive)
Legal: Those companies with government permission or licenses to conduct businesses such as mining, farming, and manufacturing. Anyone that provides essential natural resources, safe foodstuffs, and consumer products that meet government guidelines and are marketed discreetly via channels of distribution randomly supervised by responsible government authorities.
Quasi-legal: Road stands that offer direct-to-the-consumer organic foodstuffs without FDA approval; peddlers of illegal imported goods like opium, heroin, marijuana, methamphetamines, and nuclear and biological weapons; manufacturers of any kind of harmful products (especially toys for children); pharmacies filling suspect prescriptions and not using approved ingredients; and anyone who ignores the voluminous and conflicting regulations of local, state, and federal authorities in providing safe consumer products.
5.) Entertainers, showmen, models, acrobats, mimes, artists, and carnival pitchmen. (Remember the general public wants bread and circuses – and to see a little skin now and then at the circus.)
Legal: Television, radio, movie, and theater performers; painters, sculptors, singers, and dancers; comedians, ventriloquists, and puppeteers; smiling and lying politicians, casinos operators, and some goofy friends.
Quasi-legal: Prostitutes, bar flies, and street-walkers (male or female); gigolos and other con artists; race track touts, numbers runners, and unlicensed gamblers. Anyone who pleases their companions by doing something frowned upon by society.
6.) Leeches, parasites, and the ubiquitous bottom feeders (In a complex economy, there’s always some kind of cheap booze to consume and offal to recycle and those whose job it is to clean up after the party.)
Legal: Welfare recipients, criminals luxuriating in overcrowded prisons, Medicaid recipients, drug and alcohol addicts who can’t conquer their bad habits but receive financial aid to reduce public guilt feelings, subsidized farmers, bailed-out bankers, bankrupt companies and individuals, and anyone who refuses to participate in the normal activities of a capitalistic society in an effort to earn a “living wage.”
Quasi-legal: Immigrants working for employers who refuse to verify the social security numbers of their new employees, homeless beggars who prefer to live in filth on the streets and filch what they can from street vendors, thieves with a drug problem, troublemakers and sociopaths who end up in the county jail to be coddled, fed, and periodically recycled by “the system.”
The modern capitalist follows only a few rules:
1.) “Charge what the traffic will bear.” If that isn’t sufficiently profitable, charge the same price and reduce the size of the box, decrease the amount of contents inside the box, spend less on quality ingredients, cut back on the workforce, reduce the fringe benefits of the employed, eliminate services, overcharge for delivery, limit the warranty period, and cheat on your taxes.
2.) “Caveat emptor, caveat vender.” (Let both the buyer and the seller beware). In other words let the consumers, the suppliers, the dealers, the employees, the shareholders, the bankers, the auditors, and the tax collectors look out for their own interests.
3.) “Hire a good lawyer.” (Meaning: hire an immoral one who is familiar with the loopholes in the law pertaining to your business and who knows a few prominent lobbyists with political connections.) A “good” lawyer will protect your interests and even lie on your behalf when called upon to do so.
4.) “Pay attention to what your competitors are doing.” Copy their ideas when those can benefit you, enhance your product, and help you achieve your business plan. Stealing from a competitor some key employees who are dissatisfied with their labor contracts is a common and acceptable practice.
5.) Finally, never forget what the smart gauchos say who herd cattle in the pampas in Argentina: “The eye of the owner fattens the cows!”
You are now adequately prepared to launch your pet project for becoming rich and famous. Be sure you consider the many rules that govern your industry and your product or service before you decide which laws must be absolutely adhered to and which ones are unlikely to be enforced.
Good luck, Capitalist, and God speed!
P. S. Capitalism didn’t cause the current economic debacle. Many greedy, improvident, and selfish humans are responsible. Government measures such as printing money and spending it to repair our dilapidated infrastructure won’t reverse the collapse of confidence. Only the sensible, risk-avoiding management of personal finances by contrite adults will restore trust in the creditworthiness of fellow humans.
Contrary to popular opinion, “Retained Earnings” of corporations should be considered the “savings” of the corporate legal entity to be used to weather adverse economic conditions. Unfortunately, many of these earnings have been recklessly paid to CEOs and other executives as bonuses. Charities will “suffer long” and be less kind thanks to infamous financiers like Bernard Madoff.